Health Care Hackers Causing Chaos

Justin Haskins Heartland Institute
Published March 2, 2016

Consumer Power Report #496

Computer systems at Hollywood Presbyterian Medical Center were under attack for 10 days in February as hackers haggled with hospital administrators over the ransom price for ending the electronic siege. The Los Angeles-based medical center eventually agreed to pay the hackers, in bitcoin currency, a $17,000 ransom – significantly less than the original $3.6 million asking price. – to remove the “ransomware.”

Allen Stefanek, CEO of Hollywood Presbyterian, told a local NBC affiliate that although the hospital’s IT systems had been under attack, “Patient privacy has not been compromised,” according to a report by the International Business Times.

Cyber-attacks similar to the one on Hollywood Presbyterian are becoming a growing problem for health care providers large and small. Ransomware is used by hackers to invade a medical facility’s systems, shutting down many important hospital functions and making it difficult or impossible to properly operate some medical services. System shutdowns often pose some danger to patient care, as important medical records stored solely in a medical facility’s electronic database suddenly become inaccessible.

The attack on Hollywood Presbyterian isn’t the first of its kind, but rather an example of a growing and disturbing trend. According to a report by The Hill, one particular “strain” of ransomware called CryptoWall “is responsible for $325 million in damages.”

In addition to the initial damage caused by cyber-attacks, there is the risk that records could be stolen and eventually sold on the black market for a hefty sum, causing even greater financial costs down the road for patients who have to deal with the effects of identity theft. In a December 2014 cyber-attack on Clay County Hospital, a small, 18-bed hospital in Illinois, more than 12,000 records were stolen. One study by the Office for Civil Rights at the Department of Health and Human Services (HHS) reports more than 41 million medical records have been taken in more than 1,100 data breaches since September 2009.

The failure on the part of various health care providers to adequately secure patients’ records and to prevent IT system shutdowns raises serious questions about the wisdom of the Obama-backed Health Information Technology for Economic and Clinical Health Act, which was passed in 2009 and enhanced by provisions in the Affordable Care Act. The law requires all medical providers to digitize medical records, which HHS says will “reduce paperwork and administrative burdens, cut costs, reduce medical errors and most importantly, improve the quality of care.”

Not only have tens of millions of patient records been stolen since the law was passed, some reports indicate the electronic health records (EHR) mandate has failed to reduce costs. reports a survey by Medical Economics found, “More than 70 percent of large practices, 66 percent of internal medicine specialists, and 60 percent of family practice physicians would not purchase their current EHR system again if they could do it over. Sixty-seven percent do not like the functionality of their systems, and more than 50 percent say the EHRs are too expensive. A majority of respondents reported financial losses related to EHRs, and 69 percent said that coordination of care with hospitals hasn’t improved.”

EHR systems may provide great benefits for many large health care providers who can afford to implement and maintain security systems to protect patients’ information and IT systems, but for many small providers, such as Clay County Hospital, the risks and costs of EHR systems are likely not worth the potential benefits.

Government agencies should not force health care providers unwilling or incapable of protecting their patients’ private information to adopt EHR systems. Governments should instead work to improve law enforcement agencies’ ability to track down hackers who hold health care systems, as well as any other IT system, for ransom.

— Justin Haskins



It’s common for Ohioans to have no idea of what they will owe out-of-pocket for a surgery or other medical procedure, even as they’re about to go into an MRI or under the knife.

Ohio legislators want that to change. Starting as early as next January, a patient might receive, upon request, a “good-faith and reasonable” estimate of the procedure’s total cost; how much private or government-sponsored insurance would pay for the procedure; and the patient’s personal share of the bill.

It would represent one of Ohio’s broadest and most meaningful advances in health-care-cost transparency in several years.

“Health-care costs have become an ever-increasing percentage of the state budget,” said state Rep. Robert Sprague, a Republican from Findlay who has advocated for greater price transparency. “We’ve over and over again tried to contain our costs by using bureaucratic rules, but we also want to use the power of the free market.”

Greater transparency will encourage the competition needed to bring down health-care costs, he said.

SOURCE: By Ben Sutherly, The Columbus Dispatch


Gov. Scott Walker said a newly signed law is part of a longer-term effort aimed at improving patient access to mental health services in Wisconsin.

The bill, which passed without opposition last fall, comes in the midst of a shortage of behavioral care providers in the state and nation that can leave patients waiting weeks or months for care.

It creates a pair of pilot programs to test alternative-care delivery and payment models designed to reduce costs and improve care for Medicaid recipients who have significant or chronic mental illness, according to the governor’s office.

“If they’re able to provide better, coordinated, effective and efficient care in a more cost-effective way, we’re going to look to expand beyond just the pilots,” Walker said after signing the bill.

Walker signed the bill Friday at Bellin Psychiatric Center in Allouez.

Sharla Baenen, president of Bellin’s psychiatric center, said the bill marks a significant step in improving mental health care access in the state. It essentially clears the way for providers to try new methods of delivering care, such as integrating mental health care into primary care and establishing a system to help patients efficiently navigate the care system.

SOURCE: By Nathan Phelps, USA Today Network-Wisconsin


With Republican leaders pushing for major changes in the health-care system, the House will take up a series of high-profile health issues during a floor session Tuesday.

Among the issues are a proposal (HB 37) that would help clear the way for what are known as “direct primary care” agreements between doctors and patients; a proposal (HB 85) that would allow patients to stay overnight at ambulatory-surgical centers; a proposal (HB 221) aimed at shielding patients from unexpected charges through a practice known as “balance billing;” a proposal (HB 423) that would expand drug-prescribing powers for advanced registered nurse practitioners and physician assistants; a proposal (HB 1061) that would allow Florida to enter into a “compact” for multi-state nurse licensure; a proposal (HB 1175) aimed at increasing transparency about health-care pricing; and a proposal (HB 7087) that could help expand the use of remotely provided “telehealth” services.

SOURCE: News Service of Florida


Sen. Tom Saviello’s Medicaid expansion bill received a chilly reception from his fellow Republicans and the LePage administration Tuesday.

The Wilton lawmaker received support from Democrats, however, and remained undeterred.

“It’s just the right thing to do,” said Saviello, who believes the expansion he presented to the Health and Human Services Committee would help fight the state’s heroin epidemic by providing more access to treatment.

He is teaming with a fellow moderate Republican, Sen. Roger Katz of Augusta, on a compromise plan that would provide insurance to about 60,000 Mainers. A previous effort led by the two senators in 2014 fell two votes short in the House of overriding a veto by Gov. Paul LePage. All told, Medicaid expansion has been defeated five times in Maine.

While Saviello believes the political climate to override a promised LePage veto may be improved this year, he acknowledges that he has a “big hill to climb” to persuade his colleagues to vote for expansion.

“If Republicans can get around the rhetoric, they can vote for it,” Saviello said. “I am hopeful that more people will see the truth about expansion and make their decisions based on the facts in front of them.”

The compromise plan would be similar to Medicaid expansions in other states with divided government, such as Arkansas and Iowa, that used the Affordable Care Act’s marketplace as a mechanism to provide Medicaid insurance. In all, 31 states have some form of Medicaid expansion, and Maine remains the only state in New England to spurn the move.

SOURCE: By Joe Lawlor, Portland Press Herald